Understanding Cheque Bounce Due to Stop Payment by Drawer

A cheque is a common method of payment in business transactions. However, there are instances when a cheque is dishonoured, meaning it cannot be processed for payment.

One such reason is when the drawer (the person who issues the cheque) instructs their bank to stop payment. This article aims to explain the implications of a cheque bounce due to a stop payment request and the legal remedies available under Indian law.

Scenario:

Imagine you have provided goods or services to a buyer, and in return, you received a cheque as payment. Before you can deposit the cheque, the drawer issues a stop payment instruction to their bank, leading to the cheque being dishonoured when you present it for payment.

Legal Implications:

Under Section 138 of the Negotiable Instruments Act, 1881, stopping payment of a cheque without a valid reason can be considered an offence. This section deals with the dishonour of cheques due to insufficient funds or if the payment is stopped by the drawer.

The law presumes that the cheque was issued to discharge a debt or liability, and stopping its payment without justification can lead to legal consequences.

Steps to Take When a Cheque Is Dishonoured Due to Stop Payment:

1. Issuance of Demand Notice:

   • Upon receiving information about the dishonour of the cheque, you must send a written notice to the drawer within 30 days.
   • The notice should demand payment of the cheque amount within 15 days from the date the drawer receives the notice.

2. Filing a Complaint:

   • If the drawer fails to make the payment within the stipulated 15 days, you have the right to file a criminal complaint under Section 138 of the Negotiable Instruments Act.
   • This complaint should be filed within one month after the expiry of the 15-day period given in the notice.

Evidence to Support Your Claim:

To strengthen your case, it’s essential to provide evidence of the transaction and the dishonoured cheque. This can include:

• Written Evidence:

  • Agreements or contracts related to the transaction.
  • Memorandums of Understanding (MoUs).
  • Invoices detailing the goods or services provided.

• Digital Evidence:

  • Email correspondences.
  • WhatsApp messages.
  • Text messages.

Alternative Legal Remedies:

Apart from proceeding under Section 138, you may consider the following legal actions:

• Filing a First Information Report (FIR) for Cheating:

  • Under Section 318 of The Bharatiya Nyaya Sanhita, 2023, cheating is a punishable offence.
  • This should be filed within one year from the date of the offence.

• Filing a Civil Suit for Recovery:

  • Under Order 37 of the Civil Procedure Code, 1908, you can file a summary suit for the recovery of money.
  • This should be done within three years from the date the payment was due.

Mediation:

The Mediation Act, 2023, encourages parties to resolve disputes amicably. Initiating mediation can be a time-efficient and cost-effective way to settle the matter without prolonged litigation.

Conclusion:

A cheque bounce due to a stop payment instruction by the drawer is a serious matter with legal consequences. It’s crucial to act promptly and follow the legal procedures to protect your rights. Given the complexities involved, seeking professional legal assistance is advisable to navigate the process effectively.

This article is for educational purposes only and does not constitute legal advice. For specific legal concerns, consult with a qualified legal professional.